2003 (7) TMI 718 - SC - Indian Laws

construction of bridge-cum-fall - work in progress - arbitrator misconducted the proceedings - HELD THAT - Any award made by an arbitrator can be set aside only if one or the other term specified in Sections 30 and 33 of the Arbitration Act 1940 is attracted. It is not a case where it can be said that the arbitrator has misconducted the proceedings. It was within his jurisdiction to interpret Clause 47 of the Agreement having regard to the fact-situation obtaining therein. It is submitted that an award made by an arbitrator may be wrong either on law or on fact and error of law on the face of it could not nullify an award. The award is a speaking one. The arbitrator has assigned sufficient and cogent reasons in support thereof. Interpretation of a contract it is trite is a matter for arbitrator to determine. Section 30 of the Arbitration Act 1940 providing for setting aside an award is restrictive in its operation. Unless one or the other condition contained in Section 30 is satisfied an award cannot be set aside. The arbitrator is a Judge chosen by the parties and his decision is final. The Court is precluded from reappraising the evidence. Even in a case where the award contains reasons the interference therewith would still be not available within the jurisdiction of the Court unless of course the reasons are totally perverse or the judgment is based on a wrong proposition of law. An error apparent on the face of the records would not imply closer scrutiny of the merits of documents and materials on record. Once it is found that the view of the arbitrator is a plausible one the Court will refrain itself from interfering. For that reason we are of the view that the appeal has no merit and must fail. However the parties are agreed that from the date of filing of the claim till the date of award the interest chargeable would be at the rate of 1 per cent in place of 18 per cent. Thus the award and judgment under challenge stand modified to that extent. The appeal is disposed of in the aforesaid terms. There shall be no order as to costs.

Summary

Issues Involved:
The issues involved in the judgment include interpretation of force majeure clause in a construction contract, validity of an arbitrator's award, and the grounds for setting aside an arbitration award.

Interpretation of Force Majeure Clause:
The appellant challenged an arbitrator's award based on force majeure, claiming that unprecedented rain absolved them of liability. However, the Court found that the force majeure clause in the agreement protected the State from liability arising from events like unprecedented floods that could not have been foreseen. The Court noted that the appellant failed to prove that the rain causing the loss was unprecedented, leading to the rejection of the appellant's argument.

Validity of Arbitrator's Award:
The Court emphasized that an arbitrator's award can only be set aside if specific conditions under the Arbitration Act are met. In this case, the Court found that the arbitrator had not misconducted the proceedings and had the jurisdiction to interpret the contract terms. The Court highlighted that an award can be wrong on law or fact, but mere error of law does not nullify it. The arbitrator's decision is considered final, and the Court cannot reassess the evidence unless the reasons are entirely perverse or based on a wrong legal proposition.

Grounds for Setting Aside Arbitration Award:
The Court reiterated that Section 30 of the Arbitration Act limits the grounds for setting aside an award. Unless specific conditions under this section are satisfied, an award cannot be invalidated. The Court emphasized that once the arbitrator's decision is plausible, the Court should refrain from interference. In this case, the Court modified the interest rate but upheld the arbitrator's award, concluding that the appeal lacked merit.

The judgment underscores the importance of upholding arbitration awards within the confines of the law and contract terms, highlighting the limited scope for judicial intervention in arbitration matters.